Revenue and assets don’t always grow at the same rate given the structure of our fee schedules. Many of our asset management contracts have a tiered fee schedule in which our fees (measured as a percentage of managed assets) decline as assets exceed a specified level. This approach to pricing is fairly typical in the asset management space, and we believe that it aligns our clients’ interests with ours. These “breakpoints” only occur at certain, infrequent milestones, and we reached some of these in the second quarter.

We generally expect asset growth to outpace revenue growth in rising market environments, but the timing of breakpoints or changes to fee arrangements can cause quarter-to-quarter fluctuations in the spread between asset and revenue growth. It is possible to have quarters in which this spread is much narrower, as we have a number of plan providers that haven’t hit any breakpoints yet since they are still in the early stages of growth.